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How credit cards for people with bad credit can help you?

When used responsibly, credit cards can help establish or rebuild credit. However, people with bad credit may have a difficult time qualifying for a credit card.

For instance, Capital One, American Express and other popular names in the market do not offer credit cards for bad credit no deposit. This means that you have to carefully do your research to find a credit card issuer that can approve you for a credit card if you have poor credit. When looking for the best credit cards for bad credit, you need to consider different factors like low upfront fees and pre-qualification checks.

The most important thing is to ensure that the card issuer reports to all the three major credit bureaus on a monthly basis.  But to get the most out of a credit card, it is very important to make payments on time each month and keep your credit card balances low. Both secured and unsecured credit cards can help rebuild or establish your credit. The trick here is to use the card responsibly.

Unsecured credit cards for people with bad credit

As the name suggests, these cards are ‘unsecured' which means that a security deposit is not required to access a credit line.  Rather than the deposit, credit card issuers consider your ability to pay, credit rating and the information you give during application to determine whether you are eligible for approval.

Since these credit cards are unsecured, they come with a high risk to the issuers. This is the reason why credit cards for bad credit no deposit have a higher APR compared to secured credit cards. This APR also varied among cardholders depending on their creditworthiness.

If you have a better credit history, you will get a lower APR compared to those with bad credit. But if you use the credit card responsibly, your credit will improve and you can qualify for credit cards with more convenient terms.

The best-unsecured credit cards for bad credit 2018

1. Credit One Bank® Unsecured Visa® with cash back rewards

This is also among the best credit cards that can help rebuild your credit. Not all credit cards designed for people with bad credit come with reward programs and this makes Credit One Bank® Unsecured Visa® an option worth considering.

The card has an annual fee of $0-$99 and an APR of 19.99%-25.99% variable. When you are approved for the card, you will get 1% cash back on eligible purchases such as gas, grocery, internet service, mobile phone service, dining, satellite TV service and more(terms and conditions apply).

Remember to always pay in full each month to boost your credit. You can also have your payment due date changed to either 6 days after or before your current due date.

How to use the card

You can prequalify for Credit One Bank® Unsecured Visa® without damaging your credit score. As a rule, pay your bills on time every month to get a better score. You will also get 1% cash back rewards when you use the card on eligible purchases like gas, grocery and internet services.

Important consideration

The annual fee is charged immediately you open your account and this can reduce your initial credit line. If for instance your credit line is $500 and your annual fee is $75, your available credit will be $425.

Why you will love the card

If you need a card that can improve your credit and earn rewards at the same time, Credit One Bank ® Secured Visa® can be a good option for you. This card has great features that can help boost your credit while you earn 1% cash back on eligible purchases.

 

  1. Indigo® Platinum Mastercard®

This card can be a good option for someone who has previously filed for a bankruptcy. If you have ever filed for bankruptcy in the past, then you know that such information can stay in your credit report for up to 10 years. This makes it difficult for you to rebuild your credit.

The good news is that you can still be approved for certain credit cards if you have past bankruptcy history. Among these cards is the Indigo® Platinum Mastercard®.

You can even check if you prequalify for the card before applying. You do not have to pay a processing fee to open your account. The card has an annual fee of $0-$99 and an APR of 23.9%.

How to use the card

When applying for the card, you first need to answer some pre-qualification questions to find out your chances of being approved. It is also important to pay your balances on time every month to avoid the high-interest charges and this will also boost your credit. Once you use the card wisely and your score improves, you can consider other credit cards that offer reward programs.

Important tip

If you are not sure whether you qualify for the card or not, the card offers a pre-qualification option which will help you know your chances of getting approved without affecting your credit score.

Why you will love the card

People with any credit type can apply for Indigo Platinum® Mastercard®. It can especially come in handy for people who have filed for bankruptcy in the past. The card is unsecured, meaning that there is no security deposit required. It also charges a small annual fee, making it an affordable option for people who want to improve their credit.

 

  1. Milestone® Gold Mastercard®

You can see if you prequalify for the card without affecting your credit score. Just like the Indigo® Platinum Mastercard®, this is also another card you should consider if you have filed for bankruptcy in the past.

The card charges an annual fee based on your credit score. This fee can be as low as $35, $59 or $75 for the first year and a fixed fee of $99 starting from the second year. You may also be required to pay an account opening fee of $5, $25 or $50. The card has an annual fee of $35-$99 and an APR of 23.90%.

How to use the card

You can check if you prequalify for the card without affecting your credit score. You also need to pay your balances on time every month to avoid the interest charges and rebuild your credit. Once your credit score improves, you can switch to a credit card that offers a rewards program.

Important Consideration

The card charges low account opening fees, but it is also important to watch out for other fee charges. This includes a late payment fee that can be as high as $38. There is also an authorized user fee of $25.

Why you will love the card

Milestone Gold® Mastercard® comes with attractive features. For instance, people who have filed for bankruptcy in the past can be approved for the card. The card does not charge a cash advance fee for the first year. It is also an unsecured card and there is no deposit required and it has a foreign transaction fee of only 1%. You can use the card anywhere where Mastercard® is accepted.

 

  1. Total VISA® Unsecured Credit Card

Our list of the best credit cards for bad credit cannot be complete without reviewing the Total VISA® Unsecured credit card. The card does not have the best features, but it is actually a credit card worth considering if you want to rebuild your credit. It also has an easy application process.

With the credit card, you will receive an initial credit line of $300 and this will reduce the risk of overspending. But to get the best out of this card, it is important to pay your bills on time and keep your card utilization low.

How to use the card

Total VISA® has an initial credit line of $300. It is therefore not convenient when you want to make large purchases. It is also important to pay your balances in full and on time to avoid paying the high-interest rates. Once your score improves, you can consider other cards that offer more rewards.

Important consideration

Total VISA® comes with several fee charges. This includes a monthly service fee and late payment fee. You also need to pay a processing fee of $89 when opening the account.

Why you will love the card

Total VISA® unsecured credit card is specifically designed for people who want to improve their credit. If you use the card responsibly, you will see your score improving within a few months.

 

how these credit cards are secured?

Unlike unsecured credit cards, secured cards require a cash deposit during the application process. Usually, the amount you give as deposit becomes your credit line.

If for instance, you deposit $200; your credit limit will be $200. If you do not pay your bills or your default on your account, the card issuer can take the outstanding debt from your security deposit. Since they are backed up by collateral, secured credit cards are available for people with both good and poor credit.

If you pay your bills on time for the first few months, you may get your deposit back. Responsible use of the card will also improve your score and you can qualify for an unsecured card that does not require a security deposit. The minimum and maximum security deposits vary depending on the card you have applied for.

 

The best-secured credit cards for bad credit 2018

  1. Discover It® Secured

This card comes with a rewards program. Once you are approved, you will get 2% cash back at gas stations and restaurants. You will also get 1% cash back on all other purchases. If you want a card that offers rewards and you don't qualify for an unsecured credit card, Discovery It® Secured can be a good option for you.

You need to pay a deposit of between $200 and $2500 to0 access your available credit. It does not charge an annual fee and you will also benefit from the cash back rewards. It has an APR of 24.99% variable.

How to use the card

The card allows you to monitor your credit score for free. Your account is also reviewed for credit limit increase opportunities. You can use the card at gas stations and restaurants to earn extra cash back rewards.

Important consideration

The card is secured, and you have to give a security deposit when applying. But once you use it for 8 months, your account will be reviewed and you may be eligible for a refund. Just ensure to use the card responsibly and your credit score will also improve.

 

  1. Capital One® Secured Mastercard®

With the Capital One® Secured Mastercard®, there is no minimum deposit required and the card does not charge an annual fee. You only need to create an account and start the process of rebuilding your credit. It is also important to use the card responsibly.  

The card has a purchase APR of 24.99% variable. When applying for the Capital One® Secured Mastercard®, a refundable deposit of $49, $99 or $200 is required depending on your creditworthiness. If you make payments on time for the first 5 months, you may be eligible for a higher credit limit.

You can also select your own monthly due date and payment method-either online or at a local branch. The card also has a fast and easy application process. Once you make your security deposit, you will receive your card within 3 weeks.

Other features and benefits of the card include:

  •         You can keep track of your spending with the Capital One mobile app
  •         You can set up autopay for your account and your payment will be made automatically every month
  •         Personalized emails and text reminders
  •         Customer service is available 24/7
  •         The card has 0 fraud liability

How to use the card

Capital One® Secured Mastercard® can be a good option for people who want to establish or rebuild their credit with minimal upfront fees. The card does not charge an annual fee and you can receive an initial credit line of $200 after giving a security deposit of as little as $49, depending on your creditworthiness. If you use the card in a responsible way, you can get your deposit back and your credit limit will also increase with no additional deposit required.

Important consideration

To be eligible for a credit line increase with no additional deposit, you first need to make timely payments for the first 5 months. The good thing with Capital One is that you can pick payment due dates that are most convenient for you.

Why you will love about the card     

  •         Low-security deposit required
  •         No annual fee
  •         Manageable monthly payments
  •         Free online access to your account

 

Steps to improving your score using a credit card

If you have bad credit, there is no denying that qualifying for the best credit cards may be difficult. But still, there are other credit cards designed for people with bad credit and when these cards are used responsibly, your score will improve.

The first step to rebuilding your credit is to understand your credit history.

Actually, you can only know the best way to rebuild your credit if you find out the things that led to a poor credit. You can then avoid the mistakes you made in the past by using your credit card wisely. Here are the steps involved to help you achieve a better score;

Get a copy of your credit report

When you apply for a loan or credit, the lender reports your credit behavior to the three major credit bureaus, i.e. Equifax, Experian and TransUnion that then compiles your credit report. This report is used by future lenders to determine your creditworthiness.

It is therefore important to go through your credit report to ensure that all the information is accurate and updated. However, a good number of consumers find errors in their reports. The good news is that the law allows consumers to dispute any errors in their credit reports.  This now leads us to the next step;

Dispute the incorrect information

When going through your credit report, you need to confirm that all the information is accurate and updated. Any negative information in your report will obviously reduce your score. If you notice any errors, you should file a dispute with the credit bureau that provided the report before applying for a new credit card. You should also do the same to the lender that gave the inaccurate information.

Pay down your debt

If you still have credit card debs that are yet to be paid, you also need to pay it before considering a new credit line. Remember that your credit utilization rate constitutes 30% of your credit score. It is therefore important to keep your balances low and you also have to pay your balances in full every month.

But even after you pay down your outstanding debt, do not close your account. The longer your credit history, the better your score will be.

Apply for a credit card

Once you ensure that the information in your credit report is updated and errors free, you can now start the process of rebuilding your credit using a credit card. But this does not mean that you should apply for the first credit card you come across.

If you apply for too many credit cards at a time, your credit score will drop. To increase your chances of getting approved, only apply for a credit card that approves people with bad credit.  Most credit cards for bad credit will let you know if you prequalify without damaging your credit score.

Set up reminder systems

The main aim here is to rebuild your credit and you surely wouldn't want to miss a single payment. Another factor that greatly contributes to your credit score is your payment records. In fact, payment history contributes up to 35% of your credit score.

If you feel that you may forget a payment, you can set calendar notifications or sign up for reminder alerts. You can either make payments on a monthly basis or break your payments into smaller pieces.

After your score improves

After you follow the above steps and your credit improves, you can qualify for better credit cards that offer more rewards. But you should also not forget to repeat the process.

If for instance, you happen to miss a payment, your credit score will still drop. Besides making payment on time, you should also make frequent purchases using your credit card every month. Again, do not forget to pay your balances in full.

How long does it take for your score to improve?

The time it takes to boost your score depends on your financial situation. The way you use your credit card today also determine how long it will take for your score to improve. If you use the card regularly, pay your bills on time and keep your credit card balances low, your credit score will improve within a few months.

It is also important to ensure that you apply for a card that reports to the major credit bureaus on a monthly basis.

Unsecured Credit Cards for Bad Credit No Deposit Required: The Bottom Line

It may not be easier to qualify for a credit card if you have a poor or low credit history. Luckily, there are credit cards that are specifically designed for people with bad credit.

Most of these cards have high-interest rates and additional fee charges. But when used responsibly, your score will improve and you can qualify for better credit card options in future. But even after your credit improves, it does not mean that you should stop the good habits.

Remember that the higher your credit score, the more your financing options will be. And even if you miss a payment when you have good credit, your score will still drop. You can get approved for a credit card if you have poor credit. But it is only when you use it responsibly that the card will be beneficial in the long run.